On Tuesday morning, Henry Paulson — the U.S. Treasury Secretary who presided over the beginning of the financial crisis — spoke to a packed room at Manhattan club, CORE:.

He was there to discuss "Hank: Five Years from the Brink," a documentary on Paulson's view of the crisis, but also spoke at length about what America still needs to do to clean up the mortgage meltdown mess.

You didn't think it was over, did you?

The discussion was held ahead of the documentary's theatrical release at New York City's Village East theater this Friday, Jan. 31. You can also catch it on Netflix.

Paulson said that while "there's no doubt" in his mind that markets are performing normally, there's still a lot of work to be done that wasn't addressed while the government's eye was fixed on financial markets.

"We still have five regulators falling all over themselves, competing with each other, with no clear message," said Paulson.

For cash, we have the Securities and Exchange Commission. For derivatives, we have the CFTC, and so on.

"It makes no sense," he said.

Paulson went on to say that he's much less concerned about the big banks right now than he is about the mortgage market. Flawed housing policies, like the mortgage interest rate reduction for example, helped to create the mess we got in, and we need to rethink the way our country deals with these matters.

Fannie Mae and Freddie Mac, he said, need to be wound down into much smaller entities with far more limited missions. That will make the mortgage market less risky for taxpayers in the future.

The problem with that, of course, is that now that the crisis is over Fannie and Freddie are making money for the government, so there's no political incentive to unwind them.

"We're sowing the seeds for another major problem," Paulson said.

He wants more housing market risk in the hands of private entities, but it has to be done correctly.

And by correctly, he does not mean having activist money managers like Bruce Berkowitz and Bill Ackman, who see an "interesting opportunity" in this market, buy out Fannie and Freddie's businesses.

"They've taken a calculated, educated risk that the government's not going to do what needs to be done," said Paulson. But it's not the right way.

The FMIC would act as insurance the same way the FDIC does for banks, protecting 10% first-loss, private capital in the mortgage market. It would also be required to hold "a minimum reserve balance of 2.5 percent of the outstanding balance of covered securities as a catastrophic backstop that would only be utilized in the event that the 10 percent first-loss private capital is completely wiped out," according to the bill.

Well, at least there's a plan for that, because there's a laundry list of other issues that keep Paulson up at night — shadow banking, money market funds, repo markets.

The architects of the financial recovery missed those entirely, he said.